As Microsoft Corp. MSFT prepares to release its first quarter earnings on Oct. 30, the tech giant's AI and cloud services will be in the spotlight. Analysts estimate earnings per share at $3.09 and revenue of $64.48 billion.

Microsoft stock is up 24.67% over the past year, 14.52% YTD. Investors will be keen to see if Microsoft’s focus on AI and cloud can offset growing concerns over its high capital expenditures (CapEx).

Don’t Miss:

• ‘Scrolling to UBI': Deloitte's #1 fastest-growing software company allows users to earn money on their phones – invest today with $1,000 for just $0.25/share
• Mark Cuban believes “the next wave of revenue generation is around real estate and entertainment” — this new real estate fund allows you to get started with just $100.

Can Q1 Earnings Drive Microsoft's Stock Higher?

As first quarter earnings approach, Microsoft's ability to turn its CapEx investments into tangible growth will be scrutinized. While Azure's rapid expansion continues, Microsoft’s management will need to address how these investments in AI and cloud are paying off, especially in the face of economic uncertainty and potential regulatory scrutiny.

Microsoft Stock Chart Shows Bullish Momentum

The stock might continue its streak as the charts remain bullish.

Chart created using Benzinga Pro

Microsoft stock at $424.73 is trading above the eight-day, 20-day and 50-day exponential moving averages, signaling ongoing buying pressure.

The Moving Average Convergence Divergence (MACD) indicator sits at 0.17, suggesting a continued upward trend. However, with an RSI of 55.05 and rising, Microsoft stock could soon be approaching overbought territory, which could signal potential near-term volatility.

Read Also: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." These high-yield real estate notes that pay 7.5% – 9% make earning passive income easier than ever.

Betting Big On AI, Cloud Amid CapEx Concerns

In the fourth quarter, Microsoft's Intelligent Cloud business posted a 19% revenue increase, driven by Azure's 29% growth, with AI services playing a crucial role. As the company ramps up investments in data centers and AI infrastructure to meet demand, investors are questioning whether these hefty CapEx expenses will deliver returns soon enough to sustain Microsoft’s stock momentum.

Microsoft’s bet on AI is substantial — management projects a $3.50 return for every $1 invested in AI. With generative AI revenues expected to surge from $5.3 billion in 2024 to $35 billion by 2027, the company is positioning itself as a leader in the AI-driven cloud market.

However, the timeline for these returns remains a key question for analysts, especially with concerns over macroeconomic headwinds and fierce competition from Amazon Web Services (AWS) and Google Cloud.

What To Watch For

While Microsoft’s AI and cloud focus offers long-term growth potential, investors will be closely watching the first quarter earnings for signs of near-term profitability and ROI on its significant CapEx investments.

With Microsoft stock is trading at bullish technical levels, any further acceleration in cloud or AI growth could push the stock higher, though CapEx concerns may continue to weigh on sentiment.

Read Next:

• This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, and you only need $100.
• This Adobe-backed AI marketing startup went from a $5 to $85 million valuation working with brands like L'Oréal, Hasbro, and Sweetgreen in just three years – here's how there's an opportunity to invest at $1,000 for only $0.50/share today.

Photo: Shutterstock